The sort answer, is that the US government’s need to resort to accounting fictions is being used skillfully against it.

The latest AIG stunt is that it is refusing to sell its derivatives business. Remember that AIG owes the taxpayers a mind-numbingly large amount of money, but intransigent CEO Robert Benmosche has refused to execute on the agreed-upon plan, and instead is off on his own mission.

And why might that be? This is yet another, classic management favouring “heads I win, tails you lose” bet that is given more respectful treatment than it deserves by the Financial Times:

AIG has shelved plans to sell the whole of its derivatives portfolio, which nearly destroyed the insurer in 2008. It believes that keeping up to $500bn worth of complex positions could help it to survive as an independent entity and repay US taxpayers….